Which of the Following Statements Is CORRECT

question 99

Multiple Choice

Which of the following statements is CORRECT?

• A) One defect of the IRR method versus the NPV is that the IRR does not take account of cash flows over a project's full life.
• B) One defect of the IRR method versus the NPV is that the IRR does not take account of the time value of money.
• C) One defect of the IRR method versus the NPV is that the IRR does not take account of the cost of capital.
• D) One defect of the IRR method versus the NPV is that the IRR values a dollar received today the same as a dollar that will not be received until sometime in the future.
• E) One defect of the IRR method versus the NPV is that the IRR does not take proper account of differences in the sizes of projects.

Understand the significance of formal instruments of credit, such as notes receivable.

Learn the accounting treatment for the write-off of uncollectible accounts.

Grasp the principles behind the valuation and reporting of receivables in financial statements.

Differentiate between trade and other types of receivables.

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Definitions:

Ernst & Ernst v. Hochfelder

A 1976 Supreme Court case establishing that plaintiffs in securities fraud cases must prove that the defendant acted with scienter, or intent to deceive, manipulate, or defraud.

Supreme Court

The highest judicial court in a country or state, which has the ultimate authority over all judicial matters within its jurisdiction.

SEC Rule 10b-5

A regulation enacted by the U.S. Securities and Exchange Commission that prohibits fraud in the sale of securities.

Intentional Conduct

Actions undertaken with awareness and deliberate intent, often relevant in establishing liability or culpability in legal cases.